Estate Planning Isn’t Just For The Elderly

Happy, smiling couple in their sixties.

How to Prevent a Family Conflict in the Event of Incapacity

By: Anthony J. Enea, Esq.

Unfortunately, it has become commonplace for siblings, family members and friends to battle for control of the finances and care of their aging parent(s) and loved ones. Sadly, the victim in these controversies is often the family unit. I have witnessed firsthand the bitterness, resentment and destruction of relationships among parents, siblings and loved ones. The effect is best described as a “family divorce,” the impact of which may be felt for generations.

Fortunately, there are steps that can be undertaken by seniors to minimize the risk of such controversies affecting their families. As is often the case, it is imperative that the potential solutions be implemented well before the problems begin to manifest themselves and while one is mentally competent. Some potential solutions are:

General Durable Power of Attorney

A General Durable Power of Attorney with broad powers to the agent will continue to be effective even after the subsequent disability or incompetence of the principal. It is best to utilize a customized durable general power of attorney form which grants the agent the broadest powers to act on behalf of the principal, including, but not limited to the powers to engage in various types of Medicaid and Estate planning. The standard form has a Statutory Gifts Rider that must be completed and executed if the principal wishes the agent to have authority to gift or change the principal’s interest in property. In my opinion, the power of attorney with a gift rider should not be executed without the assistance of legal counsel as a result of its many complexities.

The selection of the individual or individuals who will be the named agent(s) under the power of attorney is a decision of great importance. The individual selected should be someone the principal has a great deal of confidence in and implicitly trusts. He or she should also be someone with financial and/or business acumen. If the attorney-in-fact will have broad powers, including broad gifting powers, the principal should give serious consideration to the appointment of two agents who are required to act jointly. It is often advisable that it be the same individuals that will inherit upon the demise of the senior. Naming at least two agents will create a system of checks and balances, and help reduce the likelihood of financial abuse, fraud and self-dealing.

Health Care Proxy

The health care agent selected in a Health Care Proxy is permitted by New York Law to make all health care decisions when the principal is no longer able to make these decisions. The health care proxy can specify which treatments and medical care one wishes and does not wish to have administered. Under New York Law, only one health care agent at a time can be designated in the health care proxy. The principal should take the time to tell his or her agent exactly what his or her wishes are with respect to medical care, and specifically end of life decisions (e.g. hydration and the use of ventilators and respirators). One should also consider providing a copy of the health care proxy to his or her physician.

Living Will

A living will enables the principal to state his or her wishes regarding life prolonging medical treatments. While a living will is not statutorily recognized in New York, it is still additional written evidence of one’s wish not to be kept alive by extraordinary measures.

Revocable Living Trust or Irrevocable Trust

Assets titled in the name of a Revocable Living Trust or an Irrevocable Trust are controlled by the named trustees of the trust both during the lifetime of the creator of the trust and upon his or her demise. For example, with a Revocable Living Trust, the creator/grantor of the trust can be the sole trustee and in the event of his or her incapacity, the named alternate trustee(s) will have control over the trust assets. Additionally, upon the creator’s death, the trust assets will be distributed to the named trust beneficiaries without the need to probate the decedent’s Last Will.

The execution of the aforestated documents will go a long way in obviating the possibility of litigation regarding end of life and burial decisions.

The above referenced forms enable an individual to protect him or herself by enabling the individual to choose a family member or trusted friend to make financial and/or health related decisions if he or she is no longer able to do so.

However, if because of alleged financial, physical or emotional abuse it becomes necessary or inevitable that legal action be undertaken, in most instances, a proceeding under Article 81 of the Mental Hygiene Law for the appointment of a guardian will be the appropriate legal proceeding. The Petition can also seek to void documents, transactions and contractual arrangements entered into by the alleged incapacitated person or his or her agent under a power of attorney.

As part of an Article 81 proceeding, the courts have voided powers of attorney, health care proxies, Trusts, and Last Wills and Testaments executed by the incapacitated person and have also voided transfers of assets made by the incapacitated person. An Article 81 proceeding can be a very powerful tool in reversing acts of financial abuse and improprieties.

From the above stated I believe it is sufficiently clear that taking appropriate steps to prevent clashes by family members over one’s assets and medical decisions is imperative. However, if a clash is inevitable Article 81 of the Mental Hygiene Law will serve as a powerful vehicle to help rectify any wrongdoing.

Enea, Scanlan & Sirignano, LLP